- Giant $20bn buyback approved
- Returns are below average
Citigroup (US:C) was one of the US banks that suffered grievous, though luckily not mortal, injuries during the financial crisis in 2008, and the intervening period has been dominated by remedial work and restructuring, on a trajectory that is uncannily like the path taken by NatWest (NWG). The difference with its UK cousin, as these results made clear, is that Citigroup is struggling to be anywhere near as profitable, despite the outperformance of some of its divisions and a large share buyback programme ensuring investor goodwill.
The results showcased a mediocre return on tangible common equity (ROTCE) of 7 per cent, with FactSet ROTCE forecasts for next year not shifting from 9 per cent. This means returns at Citigroup are well behind its banking peer group in the US, and nowhere near on schedule to achieve a target of 11 to 12 per cent ROTCE in 2026, as set out by chief executive Jane Fraser. In effect, Citigroup is struggling to be merely average.